On
November 1, the Centers for Medicare and Medicaid Services (CMS) issued its
Calendar Year (CY) 2013 final rule for the outpatient prospective payment system
(OPPS). In the rule,
CMS clarifies that it was not the intent of the agency in the CY 2012 OPPS
final rule to establish different requirements for critical access hospitals
(CAHs) and for OPPS hospitals for the same services. Therefore, physical
therapy, speech therapy, and occupational therapy services that are paid under the
OPPS are subject to the direct supervision requirements in 42 CFR § 410.27,
whether they are furnished in OPPS hospitals or CAHs. The physical
therapy, speech therapy, and occupational therapy services that are not paid
under the OPPS and are paid instead under the Medicare Physician Fee
Schedule are not subject to the direct supervision requirements in §
410.27, whether they are furnished in OPPS hospitals or in CAHs.

As previously discussed in the
proposed rule CMS has implemented the Medicare Part A to Part B Rebilling (AB
Rebilling) Demonstration, which allows participating hospitals to receive 90%
of the allowable Part B payment for Part A short-stay claims that are denied on
the basis that the inpatient admission was not reasonable and necessary.
Participating hospitals can rebill these denied Part A claims under Part B and
be paid for additional Part B services that would usually be payable when an
inpatient admission is deemed not reasonable and necessary. This demonstration
is slated to last for 3 years, from CY 2012 through CY 2014.

In the proposed rule, CMS
discussed that when a Medicare beneficiary arrives at a hospital in need of
medical or surgical care, the physician or other qualified practitioner must
decide whether to admit the beneficiary for inpatient care or treat him or her
as an outpatient. In some cases, when the physician admits the beneficiary and
the hospital provides inpatient care, a Medicare claims review contractor, such
as the Medicare Administrative Contractor (MAC), the Recovery Audit Contractor
(RAC), or the Comprehensive Error Rate Testing (CERT) Contractor, determines
that inpatient care was not reasonable and necessary and denies the hospital
inpatient claim for payment. In these cases, Medicare allows hospitals to
rebill a separate inpatient claim for only a limited set of Part B services,
referred to as "Inpatient Part B" or "Part B Only" services.
The hospital also may bill Medicare Part B for any outpatient services that
were provided in the 3-day payment window prior to the admission.

Hospitals have expressed concern
that this policy provides inadequate payment for resources that they have expended
to take care of the beneficiary in need of medically necessary hospital care,
although not necessarily at the level of inpatient care. Hospitals have
indicated that often they do not have the necessary staff (for example,
utilization review staff or case managers) on hand after normal business hours
to confirm the physician's decision to admit the beneficiary. Thus, for a
short-stay admission, the hospital may be unable to complete a timely review
and change a beneficiary's patient status from inpatient to outpatient prior to
discharge.

In the proposed rule, CMS
indicates that hospitals appear to be responding to the financial risk of
admitting Medicare beneficiaries for inpatient stays that may later be denied
upon contractor review by electing to treat beneficiaries as outpatients
receiving observation services, often for longer periods of time, rather than
admitting them as inpatients.

CMS received approximately 350
public comments, including those from APTA, in response to its solicitation in
the proposed rule regarding possible policy alternatives to remedy the issue of
Medicare Part A inpatient admissions and observation stays paid under Medicare
Part B. Stakeholders urged CMS not to adopt a final policy regarding patient
status in this final rule but instead develop an informed course of action in
the upcoming months through a formal, ongoing dialogue with all interested
stakeholders. A few stakeholders recommended immediate action to limit
beneficiary liability for SNF care when the 3-day qualifying hospital stay is
subsequently denied and for the difference in beneficiary cost-sharing between
hospital inpatient and outpatient services.

In the final rule, CMS summarizes
the feedback received in response to the solicitation in the proposed rule but
does not provide responses to the public comments. CMS states that it strictly
solicited public comments, and did not propose any changes in policy. CMS
states that it will consider the feedback received from the public in its
future policymaking.